Law firms understanding the 2024 market drivers will perform exceptionally well. Others will be hit or miss. Corporate counsel love the challenges of the market drivers and want law firms who can relate to why they enjoy the work — as well as their core needs. The ability to meet 2 needs more than doubles the rewards.
We discussed these drivers during our 15th Annual Market Outlook and Client Service Review on January 11, 2024. You can see the recording here. The top 7 takeaways and insights from the webinar include:
Spending on Outside Counsel is Resilient
56% of clients plan to increase spending on outside counsel in 2024. Another 30% will hold spending at last year’s record levels. The drivers include:
- New and novel work with immediate business impact
- Few additions to the in-house staff
- Record workloads
- Activist workforces
- Unending stream of regulations
One Powerful Core Market Driver
One unifying reason is driving so many crucial trends including:
- Outside counsel spending increases
- Legal market reliance
- Higher rates
- Technology adoption
- Layoffs at client companies
- Rise in complex litigation
More than 80% of all companies are undergoing a business transformation. More importantly for law firms — 67% of corporate counsel play a lead role in how companies implement these transformations. Almost every transformation includes a plethora of new and old legal issues.
The law firms who bring new ideas and approaches will win this work without ever seeing an RFP.
Clients are examining regulations to find new opportunities in their markets and avoid obstacles at a pace never seen before.
Clients Quietly Converging Law Firm Panels
Corporate counsel have too many law firms. And — they are tired of pitches and proposals. These clients are giving more work to law firms who understand their needs (see transformation above) — and not giving work to others. The result is a 24% drop in the number of law firms clients use.
There is little fanfare and no announcements. The work either stops flowing or keeps coming.
Still More Open to New Firms than They Have Been in 20 Years
Despite the quiet convergence clients are more open to hiring new firms than they have been in 20 years. This is a proxy for how open clients are to new ideas — because the newly hired law firms get the work by offering new ideas.
Clients entrust more to law firm partners who share opinions and ideas.
Small and Midsize Firms Get Their Day in the Sun
Top legal decision makers report that small and midsize firms are often quick to provide ideas on the spot. While not poised to perform cross-border M&A — these firms are grabbing meaningful assignments and acting as a thorn in the side of larger firms that are reluctant to share new ideas. 52% of clients report giving meaningful work to small and midsize firms — many who punch above their weight.
The quest for new ideas and custom solutions can come from anywhere. Top legal decision makers want new ideas and custom solutions.
RFPs Bore Clients to Tears
Clients continue their dislike of RFPs. Some may still issue them — but few even read them if they don’t offer something interesting and new early on. These corporate counsel say one good idea makes it worth it to go through the process — if not — nothing changes.
We recommend putting one client-specific idea in the front of your RFP response.
6 Top Growth Practices and Industries
Almost every practice is seeing a spending uptick — 6 stand out as higher than all the rest. These practices benefit most from the business transformation. We discussed these in detail 2 weeks ago. You can find the discussion here.
Client development skills and thought leadership are the 2 winning secrets for this market. Customized solutions and new ideas demand client interactions and input. The firms with the most meaningful dialogue will take the work from others. But the need is so compelling and broad that it’s not too late to start the dialogue. We recommend reaching out to your top clients today to learn where they are in their transformation — and don’t forget your best ideas.
You can watch the video of the 15th BTI Market Outlook and Client Service Review here. You can also get a sneak peek at the law firms clients single out as being on the leading edge of law and best at helping clients move ahead in our brand new report BTI Leading Edge Law Firms 2024: Law Firms Creating the Future with and for Clients.